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sibilities, and to confront serious emergencies.



132 THE WORLDS FAIR CITY.

With a remarkable mental alertness he seizes
upon the salient points of a question or of a
proposition, and fairly rushes at correct con-
clusions, this enables him to quickly organize
and to rapidly consummate his plans. His con-
fidence in himself does not prevent him from
carefully weighing the views of others.

' ' Mr. Baker is sensitively alive to tne
personal responsibility which a public trust
imposes and he scrupulously discharges his
official duties. His convictions are strong and
well defined, and his determined advocacy of
them expressed regardless of their effect upon
his personal popularity.

' ' Mr. Baker was elected to the presidency of
the Board of Trade by a very large majority,
amounting practically to a unanimity, and was
unanimously re-elected to that important
office. His administration is distinguished by
his uncompromising war upon so-called bucket
shops, in the maintenance of legitimate busi-
ness, and by his identification with a common
and general commercial prosperity, against all
monopolies. He has always been upon the
side of the farmer in the adoption of all proper
means to obtain remunerative prices for the



MR. WILLIAM T. BAKER. 133

products of the soil, and for the enrichment
of the great West. He believes in the utmost
freedom of man and of his inalienable right to
all natural advantages. He would destroy
completely all barriers to an unhindered com-
mercial intercourse, not only between states,
but between countries, and has an abiding
faith in the salutary results of an untrammeled
and generous commercial competition.

' ' He is a man of quick sympathies, and
claims for charity are subjected to the same
searching analysis which by the constitution
and habit of his mind he applies to business
propositions. When he establishes their de-
servedness he acts immediately, practically
and unostentatiously, and upon the maxim
that ' ' he gives twice who gives quickly. " His
extensive business interests do not entirely
absorb his time and his views upon controlling
and prominent subjects of public concern are
by reading and thought, well matured and
emphatic; hence his duties of citizenship are
intelligently and fearlessly performed. "

Looking backward it is found that Mr. Ba-
ker at fourteen years of age was employed as
a clerk in a country store at Groton, New



134 THE WORLD'S FAIR CITY.

York. Afterwards he went to McLean, in the
same state, where he engaged in the same
business. Then he caught the western fever,
so called, and came to Chicago where he soon
was employed as bookkeeper for Hinckley &
Handy in the old Board of Trade Building on
South Water street. He finally succeeded
Mr. Handy in the firm. In 1868 Mr. Baker
formed a partnership with C. A. Knight and
W. F. Cobb, under the name of Knight, Baker
& Company, which continued up to 1872,
when Mr. Knight retired from the business.
The firm is now W. T. Baker & Company.

Thus may be traced a steady career in com-
mercial life without failure or divergence, all
of which prove the fact that continued honest
effort is sure to bring success, provided the
vocation is wisely chosen. Mr. Baker was
fortunate in his choice, consequently success-
ful. He is now one of the wealthy men of
Chicago. He contributes liberally to every
worthy cause, and always manifests a keen
interest in the welfare of the people. He is
one of the representative Board of Trade men,
the business of which is such a potent force in
the markets of the world.



THE CHICAGO BOARD OF TRADE. 135
THE CHICAGO BOARD OF TRADE.

Tourists who stop for any length of time in
the World's Fair city, always visit the Board
of Trade". The spectators' gallery overlook-
ing the wheat pit is generally filled with visit-
ors, many of whom are ladies, who gaze with
astonishment, and something like fascination
upon the lively scene below.

This scene may be compared according to
its various degrees of excitement to a throng
of boys just dismissed from school, and when
its energy increases to the extreme point, one
might imagine it to be a recital of the reign of
terror, or pandemonium; such apparent disor-
der prevails.

When the body of diplomatic representa-
tives of foreign countries, embracing the min-
isters of France, Sweden, Switzerland, Eng-
land, Spain, Corea, China, Colombia, and
others, visited Chicago in 1891, they occupied
seats in the spectators' gallery one morning in
order to view Commerce in a state of agita-
tion. It was, however, a day of unusual calm,
as there were no startling fluctuations in the
rates of cereals; but "the boys" hearing the
rumor of the advent of the distinguished



136 THE WORLD'S FAIR CITY.

strangers snuffed royalty in the air, and, ac-
cordingly gave the titled guests a right-royal
reception. The clapping of hands, enthusi-
astic shouts, and frantic gesticulations, of
the hosts on the floor of 'Change, gratified
and amused the welcome diplomats not a
little.

During their short visit to the great metrop-
olis of the West, a magnificent banquet was
given in the Auditorium in honor of them by
the World's Fair management, attended by
the representative men of the city. The
speeches on the occasion were unexampled at
any banquet before in this country, because
of the diversity of tongues in which they were
delivered. The Washington Park Club also
entertained them. Thomas B. Bryan, and
Joseph Medill, editor of the Chicago Tribune
each gave them an opportunity to see how
cordially guests are entertained in the West,
by giving them a formal reception at their own
homes.

But they saw the operators on the Board of
Trade in its every-day garb and board-of-
trade manners; a sight which is peculiarly
interesting to the observer in the gallery.



THE CHICAGO BOARD OF TRADE. 137

"What are they doing?" asks the fellow
from the rural districts.

' ' Buying and selling grain according to the
rules of the Board of Trade, " says some one
who claims to know.

The general objects of the board according
to Secretary Stone's report are:

' ' To maintain a commercial exchange.

1 ' To promote uniformity in the customs and
usages of merchants.

"To inculcate principles of justice and
equity in trade.

"To facilitate the speedy adjustment of
business disputes.

' ' To acquire economic information ; and
generally, to secure to its members the bene-
fits of co-operation in the furtherance of their
legitimate pursuits."

The above statements are unobjectionable
in every particular; but the reputation this in-
stitution has acquired on account of the abuses
of its privileges is somewhat gloomy, and may
be misleading to those who have not made an
impartial investigation. Secretary Stone in
his report of 1888 gives a clear statement re-
garding these abuses, while, in the same para-



138 THE WORLD'S FAIR CITY.

graph, he explains in forcible language the
legitimate claims which constitute the opera-
tions of Boards of Trade. He says:

That these agencies are, in exceptional instances,
misunderstood, and are used for illegitimate business,
is not denied, any more than is doubted that they pro-
mote the general prosperity and are indispensable to
the development of the country. A perversion of priv-
ileges attends all institutions and professions, and can-
not be eradicated by laws and regulations, but must be
destroyed by the cultivation of lofty mercantile princi-
ples, and by their widespread recognition. Happily
such principles are becoming more and more prevalent,
and whenever violated are condemned. While it is
true that traders in all departments of business indulge
in speculation to an extent not warranted by their finan-
cial strength, it is too late, in view of what has been ac-
complished, to deprecate speculation, in its proper sense,
as an element in mercantile life. It has uncovered re-
sources, it has stimulated a laudable enterprise, it has
created values, it has quickened industry, conserved
individual capacities, promoted intelligence, awakened
ambition, augmented the comforts of life; it has intro-
duced delicacies and luxuries, it has brought refine-
ment and development to human character, built
churches and asylums, constructed railroads, dis-
covered continents, and brought together in bonds of
fellowship the nations of the world; it is aggressive,
courageous, intelligent, and belongs to the strongest
and ablest of the race; it grapples undismayed with
possibilities; it founded Chicago; it rebuilt a great city
upon smouldering ruins, and impels it in the march of
progress. Whenever this kind of speculation is de-
nounced it is misunderstood, and it is often decried by
those who unconsciously share its benefactions.



THE CHICAGO BOARD OF TRADE. 139

legitimate speculation is laudable enterprise.

Successful enterprise is practical prophecy.

Phophecy is the anticipation of events, and may be
the highest exercise of the human mind.

The anticipation of commercial events, arrived at
through mental penetration and sagacity, and founded
upon reason and judgment, becomes, when put into
aggressive, honorable and practical activity, approved
speculation in business.

An investment of money made upon a blind chance
is wholly pernicious, and defies every principle of mer-
cantile honor as well as the laws of the land. Frown-
ing upon such methods and motives, this board is
opposed to illegitimate business in every form, and is
specially emphatic, in its rules and proceedings, against
engaging in transactions where the delivering and re-
ceiving of merchandise are not contemplated. A failure
to fulfill a contract based upon such conditions is more
swiftly and severely followed by penalty in this board
than among any other class of merchants.

One great theme for criticism of the trans-
actions of Boards of Trade, has been that of
buying and selling grain for future delivery.
A bill is now (1892) pending in Congress
aiming at the destruction of this practice.
Secretary Stone defended very strongly this
system in his report of 1887, as follows:

Buying and selling for future delivery exist in all
departments of trade, but nowhere are they surrounded
by so many safeguards, or attended with such benefi-
cent results, as under the rules and regulations of this
board arid of kindred organizations. A sacred and



140 THE WORLD'S FAIR CITY.

exact observance of contracts is insisted upon, and all
transactions are based upon property tangible, defined,
accessible and convertible.

This beneficent method is the outgrowth of necessity,
and has brought into existence the chief grain markets
of the world; without it the hazards of business would
increase, and the movement of commerce would be-
come sluggish, instead of quivering with activity. It
provides economy and financial safety in sending food
from those countries which produce a surplus of grain
to those that do not raise enough for their own subsist-
ence.

The activities of the Exchange during the past year
exemplify the soundness of its methods, and constitute
an assurance that no one shall be deprived of the ad-
vantages of this market by any scheme to interfere
with the regular course of business. The dissemination
of the information which it collects forms the basis
of business plans in very department, and renders the
accomplishment of. so-called "corners" almost, if not
quite, impossible; its broad advocacy of measures for
commercial prosperity, and for the supremacy of mer-
cantile honor, may be found in its records under the
form of resolution, correspondence, official representa-
tion and disciplinary proceedings.

Tn his report of 1890 he defines more
clearly the value of this system (future de-
livery), and takes a firm stand in its defense.
He says:

The system with all its safeguards, by which the
great crops are moved and realized upon, and by which
a ready market is secured, regardless of the volume
offered and without depreciation of values, must



THE CHICAGO BOARD OF TRADE. 141

certainly call forth nothing less than admiration. This
system, which has created a constant demand from the
great grain markets of the world, prevents congested
markets, enabling the west to send her grain to market
without being subject to the limitations which the con-
sumptive demand would impose. It permits the agri-
culturist to sell whenever prompted to do so either by
his interest or necessity, without compelling him to
make immedite shipment. This system was devised
and is maintained in the interest of the farmer, and has
brought into existence the chief grain markets of the
world; without it the great West would not have been
developed, and the trans- Mississippi states would not
have been formed. It provides the farming commu-
nities with ready money, which in turn finds its way,
through the country store, to merchants in great cen-
ters of trade; and, more than any measure, keeps the
complex machinery of business in harmonious activity.
To withdraw or destroy it would be fatal to the success
of the grain and cotton interests, check the circulation
of money, lead to selling general merchandise on long
credit, increase business hazards, advance rates of in-
terest, cripple enterprise and prepare the way for finan-
cial disaster. The Butterworth bill is aimed at the
destruction of this system. Those who advocate its
adoption are unmindful of the benefits of the system
which it condemns, and utterly fail to comprehend the
vital relation which exists between contracts made for
future delivery of goods and the activity and growth
of trade. Should this measure become a law, its
friends would be the first to cry out against it, and
would clamor for its repeal.

Bucket-shop trading has been erroneously
confounded with the business of the Board of
Trade, on account of the fact that some of its



142 THE WORLDS FAIR CITY.

members have dealt in "Puts" and "Calls,"
but not on 'Change, however, as such business
transactions are positively forbidden by the
rules of the board as well as by the laws of the
State. The process consists in betting that
the market price of a certain commodity will
reach or pass a certain figure within a limited
time. The "Put" is a privilege to deliver at
a higher than the current price, and the
"Call" is a privilege to demand the sale of
the stock at less than the price ruling at
the time the contract is made. When the
market is steady the man who sells these privi-
leges retains all the money paid for them, and
it is only in unusual fluctuations that the pur-
chaser makes a profit.

The managers of these devices generally
claim to be connected with the Board of
Trade, and, the fact that the official quota-
tions of price changes were secured, deceived
the public until the Board of Trade sup-
pressed them altogether.

Van Buren Denslow, a correspondent of
The North American Review, says: "These
futures bear a relation to the actual grain on
hand, like that which credit currency bears to



THE CHICAGO BOARD OF TRADE. 143

the coin in which it is redeemable. They
may be many times greater in quantity, and
can be dealt in with a rapidity and dexterity
unknown by sales by inspection and delivery,
or by sample."

However, it is the dealing in futures that
makes ' 'corners" possible. Van Buren Dens-
low gives a clear account of how speculation
in future delivery involves great loss to some
one, and forces a so-called corner.

"If a speculator thinks, as Keene did in
1879, that a wet season in England will send
wheat up, after harvest, buys 5,000,000 bush-
els at $1.10, deliverable in October, and if
Chicago speculators think Keene has over es-
timated, they may make a rush to sell him all
he wants. He buys to protect the price at
which he has already bought. His own pur-
chases run up the price toward the figure at
which he aims, and seem to justify his forecast.
He buys up to 15,000,000 bushels, all that the
Chicago elevators will hold. He buys at $1.15,
and all the way up to $1.35. He has, there-
fore, two chances of loss. The small quantity
he has purchased 15,000,000 bushels is a
mere bagatelle in the wheat market of the



144 THE WORLD'S FAIR CITY.

world. . . . If he has mistaken the effect of
the British dampness he is gone. The wheat
market of the world is too big a thing to be
cornered, unless it corners itself by a short
supply. October will show whether he acted
with prescience or presumption. If with pre-
science, wheat will not rush in, and the price
will stand. If with presumption, it will break.
His puny 15,000,000 bushels are powerless
against the 800,000,000 bushels which he
doesn't hold. His one chance of profit is the
sum he squeezes out of those who have
'sold short' on his futures. His two chances
of loss are that he must himself sell out
much 'cash wheat' at a decline, and that
prices may never reach the figure at which
he has aimed."

In conclusion he says: "To see the
utilities of such transactions, requires a pro-
founder insight into the methods and harmo-
nies of trade than one can be expected to have.
They [the community] denounce the entire
practice as gambling and forthwith organize
some form of campaign for its abolition, or, at
least, stand ready at all convenient times to
denounce it on ethical grounds.



THE CHICAGO BOARD OF TRADE. 145

' ' The first function of this mechanism is to
fix an authoritative price for grain, which is
telegraphed every morning to all parts of the
world, so that every producer and purchaser
gets the quotation with his morning paper and
as often during the day as he wishes. Every
farmer and manufacturer knows daily, as to
grain, exactly what Mr. McCreery cannot dis-
cover, by spending three months in Europe,
as to dry goods. They know, not merely
within fifteen per cent, but within one-eighth
of one per cent, the exact value of every
variety of grain or provisions, cotton, petro-
leum, government bonds or railway shares, in
any and all the markets of civilization.

' ' They know that published quotation is
not one fixed by the arbitrary determination
of any one dealer, but by the aggregate ver-
dict of them all. The grain baron who knows
to a fraction the amount of grain in sight or
coming, and who stands ready to buy the mill-
ion bushels, and the 'ostler who invests five
dollars in a ' bucket-shop' on a point, or for
luck, are both represented in that quotation,
as the attractive forces of the mountain and the
pebble are felt in just proportion to their weight.

10



146 THE WORLD'S FAIR CITY.

"The ultimate criterion which determines
the validity of prices is the ratio of the supply
and demand. The speculator who can neither
be successfully cornered himself, nor beaten
on a corner when he forms one against others,
is he who judges rightly concerning this ratio.
If the normal consumption of wheat for the
population of the United States be five bush-
els per capita per annum, while the surplus
which Europe can take at $i per bushel is
200,000,000 bushels, an American wheat crop
of 550,000,000 bushels present a surplus of
100,000,000 bushels of supply over demand.
Hence the price must go below #i; and he
who combines or ' bulls ' to force it up to
$i. 10, or even to hold it at $i, is simply pre-
sumptuous. If he offers to take wheat at those
rates for any considerable length of time, the
interests of commerce and the rights of con-
sumers require that he shall be 'squeezed,'
and, if he persists, ruined as a punishment for
fighting against natural law. In the case of
the Keene wheat deal, the proof is now clear
that he operated against the natural law of
prices, by underestimating the capacity of the
American supply rather than by overesti-



THE CHICAGO BOARD OF TRADE. 147

mating the extent of the Englisn deficiency.
There is no more chance in the operation
of supply and demand than in gravitation.
He who buys or sells, therefore, with an ade-
quate expert knowledge of the conditions which
control prices plays less a game of chance
than he who builds his mill by a stream and
expects its waters to turn his wheels and grind
his grist. The economic law that excess of
supply over demand must reduce, and excess
of demand over supply must raise prices,
would be worth whole columns of verbal afflor-
escence and camp-meeting rhetoric."

Secretary Stone, in his report of 1 890, makes
a strong appeal to producers concerning the
above statement. He says:

Surplus grain supplies may furnish a desirable theme
to the unthinking politician for stump speeches, but
they are deplored by the thoughtful and studious po-
litical economist, and rejoiced over by those countries
which cannot produce enough to feed their own peoples.
I,et the farmer dismiss this idea of the desirability of
excessive crops, especially of wheat, and place a higher
estimate upon the value of a home market, of diversi-
fied crops and of the interchange of commodities be-
tween the States. He should not lose sight of the fact
which stubbornly confronts him, notwithstanding the
fascination of his miles of waving wheat, that the ex-
port price of that grain makes the price of the entire
crop, and that such price is dictated by competition



148 THE WORLD'S FAIR <T/f y.

with surplus wheat producing countries where labor
has its least reward. The policy of those countries
which do not raise sufficient food to supply their own
populations, is to stimulate the production of wheat in
other lands and bring as many sellers as possible to
their markets. Why should we contribute to this
policy ?

When granaries are full and labor is unemployed
the public safety must need be in peril. A year of
scant crops and good prices is far better than one with
enormous crops, held at the mercy of importing coun-
tries dictating to us terms of sale.

As an agricultural and commercial educator
Mr. Stone is an enthusiast. He not only be-
lieves in enlightening the producer in the art
of calculation, in regard to his productions,,
but, also recommends the establishment of a
school for the purpose of educating the youth
in practical business principles. The sugges-
tion is timely, but it is a question whether cul-
tivation could develop power equal to the in-
stinctive genius that is possessed by some of
Chicago's great capitalists. However, as Mr.
Stone has, undoubtedly, given the subject due'
consideration, his opinion is worthy of serious
thought, and as he never discusses illogically,
nor expresses his thoughts awkwardly, the
following paragraph which is quoted from his
report of 1890, should be read:



THE CHICAGO BOARD OF TRADE. 149

The remarkable progress made in great industries,
and intense competition in the conduct of business in
all departments, have greatly stimulated study and in-
vention as applied to commercial life, and have led
broad-minded men who superintend extensive mer-
cantile establishments to place a high value upon in-
telligent labor, and upon exceptional mental endow-
ment and discipline, in responsible positions. Compe-
tition in business is no longer along the coarser and
superficial lines; it reaches into the realm of acute
mental analysis and scientific acquisition; without
these there is small hope of success in conducting
great enterprises. Hence it is that our graduates from
the higher institutions of technology find immediate
and remunerative employment. There is no field in
this country so favorable for the establishment of an
institute for scientific education of the highest order as
Chicago, and no time so auspicious as the present.
Such an institute would contribute to the national
wealth more quickly and substantially than does the
university with its more classical curriculum.

The origin of Boards of Trade is difficult to
trace backward on account of the changes in
the formation, and in the privileges granted to
them. Lorenzo Sabine, Secretary of the Bos-
ton Board of Trade, gave a very interesting
history of these organizations in his report of
1859, which was published in the New York
Banker s Magazine. From this report much
information is gleaned showing the origin and
development of these institutions and their
benefit to business men of all classes. Before



1 56 THE WORLD'S FAIR CITY.

the Board of Trade was established in Eng-
land, Queen Elizabeth, made an attempt to
regulate trade, by granting patents to compa-
nies or individuals, for dealing in almost every
known commodity, which could be purchased
only of the several patentees; but she soon



Online LibraryC. DeanThe World's fair city and her enterprising sons → online text (page 8 of 27)